Businesses face an accelerated pace of change as digitalisation, disruptive business, and rapidly changing consumer expectations reshape their world. At the same time, the demands of a new generation of employees for meaning in their work, the declining levels of trust in companies, and a wider debate about the role business can or should play in society are reshaping expectations of companies. Over the past few years, a growing number of business leaders and experts have spoken out about how a strong shared sense of purpose can help companies meet these new challenges and transform their businesses.
A global survey by Harvard Business Review Analytic Services of 474 executives found that although there is near unanimity in the business community about the value of purpose in driving performance, only 46% of the executives surveyed said their company has actually articulated a strong sense of purpose and uses it as a way to make decisions and strengthen motivation, and 44% said their company is trying to develop a clear purpose. In businesses where purpose has become a driver of strategy and decision-making, executives reported a greater ability to deliver revenue growth and drive successful innovation and ongoing transformation.
The survey defined business purpose as “an aspirational reason for being, which inspires and provides a call to action for a company, its partners and its stakeholders, and provides benefit to local and global society.”
Almost all survey respondents understood that purpose could be a powerful leveraging tool in business: 89% of all respondents said companies with a shared sense of purpose have greater employee satisfaction, and 84% said businesses with shared purpose are more successful in transformation efforts.
What are the barriers to finding and embedding a shared sense of purpose?
Respondents cited a number of barriers including a focus on short-term value creation, insufficient buy-in across the company, systems and infrastructure that are not aligned with long-term purpose, and the lack of meaningful metrics to capture sustainable value creation.
One key difference between purpose-driven businesses and those that struggle to embed a clear purpose stood out in the survey: communication. The companies that struggled reported poor internal communication as the most significant challenge in activating purpose in their company.
When asked what was required to better integrate purpose in their company, many executives replied that companies need to offer better leadership development and increase engagement with employees. Experience has shown that a purpose has to be driven, operationally and in depth, by the whole company and this starts with the CEO and the leadership team.
It’s one thing to state a purpose and a set of values, enacting them in the company requires ongoing work and consistency across many disciplines and activities.
Ensuring that performance metrics and incentives are aligned with purpose is also seen as an important factor, as it makes the tie between purpose and performance explicit for each employee. Purpose is connected to transformation, and such fundamental changes may require alternative measures of performance and the capabilities to achieve it. Several change management experts suggest that employees may be the most essential audience for messages around purpose. It is important that the purpose resonates with the employees; if it doesn’t, then the customers will catch on very quickly.
The road ahead
The research underscores the challenges companies face and the benefits companies see when they make purpose a priority. The survey results suggest that purpose-led companies have grown and transformed more vigorously than their peers. Executives at purpose-driven companies believe that their customers are more loyal and their employees more engaged. They see themselves as market leaders with a brighter future than their competitors, and they indicate that they are reaping major rewards for their efforts. The executives also indicate that they will continue working to embed purpose across their companies.
One thing is clear – businesses do better when everyone is rowing in the same direction. A well-integrated, shared purpose casts that direction. Without the shared purpose, companies tend to run in circles, never making forward progress but always rehashing the same discussions.
April 28, 2021